Cisco, Huawei and trade wars

Reports allege that a Cisco-led lobbying effort prompted a scathing U.S. report on the national security threat posed by China's Huawei. This is how trade wars start.

WASHINGTON -- The back story on the scathing congressional report on security threats posed by Chinese telecom giants is beginning to emerge.

Reportedly at the center of U.S. lobbying effort against Chinese telecom gear manufacturer Huawei is none other than Cisco Systems, the U.S. network equipment giant whose Chinese partners have included Huawei.

The Washington Post reported this week that it obtained a copy of a September 2011 “presentation” it said was authored and distributed by Cisco. The Post article asserts that the Cisco document is part of a lobbying campaign on Capitol Hill to blunt Huawei’s access to the U.S. telecom equipment at a time when carriers are building out faster IP-based networks.

[Get a 10% discount on ARM TechCon 2012 conference passes by using promo code EDIT. Click here to learn about the show and register.]

The Post quoted the Cisco report as asserting that “Fear of Huawei spreads globally,” adding, “Despite denials, Huawei has struggled to delink itself from China’s People’s Liberation Army and the Chinese government.”

The article linked what is said is a Cisco-led lobbying effort to this week’s release of the House Intelligence Committee report warning that Huawei and China’s other large telecom equipment vendor, ZTE, pose a threat to U.S. national security.

Cisco declined to comment on the Post story or the House report, saying only that it is attempting to get a copy of the document cited in the article to “verify its validity.” The company acknowledged to the Post it has recently “taken a more competitive stance against competitors including HP, Huawei and Juniper.”

From here, the alleged Cisco lobbying campaign against former partner Huawei looks like a continuation of a long-running intellectual property fight that ended in a stalemate. During a visit to Huawei headquarters in the late 1990s, we asked Huawei executives about widespread allegations of IP theft. We were shown the door.

The Cisco lobbying effort, if in fact that’s what’s going on, coupled with the House report on Huawei along with concerted U.S. efforts to stop domestic carriers from buying Chinese networking products constitutes an major escalation of U.S.-Chinese trade frictions.

If it continues, a trade war with China in key sectors like telecommunications and energy (the Commerce Department announced tariffs this week as high as 36 percent on Chinese solar panels) is inevitable.

The timing of the House report’s release on Huawei and ZTE was not a coincidence. Bashing China has become a standard election-year tactic. In the long run, we’d be far better off competing against China than starting trade wars that will only hurt both nations.

when you said "copied Cisco", show the evidence, file a lawsuit. Huawei/ZTE has business outside of China. There is always legal ways to protect your rights in or outside of China.
You should go to Afghanistan if you really like wars

to Bert22306: lack of IP protection in China is not many Chinese want. It is now more and more clear that it is against China's own R&D development. Rome was not built in a day. This is actually an area to have good cooperation rather than confrontation.

I personally don't believe China is dumping, they have such an extremely low cost base that they really don't have to try to undercut the US or other western countries. Really, the options are:
1. Start paying US workers $10 per day for 18 hours labour while removing the right to strike and all worker protections etc. allowing the greedy operators of essentially US businesses to buy their Beamers & Merc's while still employing locals (if you can call it employing) (figures may be a little off, but get the drift) effectively leveling the playing field.
2. Tax imports based on their origin and the costs associated with manufacturing in those loactions effectively leveling the playing field.
3. Build a great wall to keep out the Mongol hoards (:-) ala Great Wall of China.
3. Ban outsourcing.
There are presumably many more variations of these themes, but as long as currently China and next year maybe Africa have such an extremely low cost base there just simply isn't any competing. I've run several projects over the years, and as soon as it becomes a volume or commodity product it has to be made in Asia, Africa or Mexico. I remember for one product the manufacturing cost (assembly/test) not including parts was $4.60 in China compared to $23 in Australia (sorry guys didn't get quotes from the US) for a product that had to sell for about $32. As you can see, no contest. I agree that China will hurt their own market for their goods eventually, and I see the US labour and deficit situation a precursor. Eventually someone will have to have the balls to up taxes to be able to feed a growing No. of jobless with a shrinking tax base. People just won't earn enough to buy unnecessaries. I'm not saying it's a great idea, only that it's an inevitable outcome.

"Some people never consider co-operation as an option, never respect others and think things from others perspective."
Exactly. And the lack of IP protection enforcement in China is "not looking from the others perspective." Especially true when design and manufacturing are done in separate countries.

Yes, but your point only goes so far. You can't concentrate only on the installation industry. As nice as that part of the equation might be, it's not enough.
Economic growth occurs where innovation is happening. As others have pointed out, design and manufacturing feed off one another. To shorten product cycles, eventually these two want to be in closer proximity.

Sorry if my post was not clearly targeted. I was responding to "We need a trade war with China". Some people never consider co-operation as an option, never respect others and think things from others perspective. They want nothing but force their will onto others.
Things can be win-win if we try for it. but will be zero-sum or even worse if no effort in the right direction. I would suggest BobsUrUncle watch the documentaries on world war II. I see no winner form any war, just tragedy. yes, we are talking about economics, but with that mindset, real war is closer than we think.
BTW, think about who is really responsible for the problem of US economy, China or the 1%? Who created the bubbles? Who benefited form the bubbles and accumulated more wealth when bubbles break? Why the media is always focusing on China only, who control media?

@Bert22306
"Nothing comes for free, neither in the US nor in China. If China dumps products on the US market, that hurts US industry, which hurts employment opportunities, which means reduced demand even for Chinese-made products."
And that really needs to be viewed in a broader context.
Consider the solar panels discussed elsewhere. Chinese competition has made it difficult for a US manufacturer to produce solar cells, because Chinese producers have lower costs and can sell them cheaper. If you concentrate only on US photovoltaics manufacturers, it looks dismal.
But making the underlying photovoltaics is only one part of an overall solar *industry.* Other companies will be responsible for taking those solar cells and placing them into panels, which must be sold, installed, and serviced, with jobs every step of the way. Part of the problem the solar industry faces is high cost of entry for customers, because solar panels are expensive.
If the underlying solar cells are cheaper because China has glutted the market and many Chinese companies are selling below cost, this lowers the cost of solar installations made by US companies, and may *help* the growth of the entire US solar industry.
This applies to other areas besides the solar industry, too.
And on a larger level, those jobs moved offshore because they could be done cheaper elsewhere. Bringing them back would mean higher costs for manufacturers because of higher US pay scales, and higher *prices* for those buying the affected products. Higher prices might just *drop* demand for various things, because the higher prices might be more than customers are willing to pay for things they can arguably do without.
I fear the cost/benefit analysis is usually not as simple and clear cut as the prevailing rhetoric makes it appear.

"After enjoyed the inexpensive products, now you want back the money you paid?"
No, they want back the jobs they lost.
Nothing comes for free, neither in the US nor in China. If China dumps products on the US market, that hurts US industry, which hurts employment opportunities, which means reduced demand even for Chinese-made products.
China is making itself an easy target, with its attitude toward intellectual property. The much lower wages in China should be plenty of incentive for moving US jobs to China, but the IP nonsense makes it that much easier for the US to impose trade barriers.